Oceanic Pacific Salvage and Steel Ltd (in liquidation) v Specialised Container Services (Napier) Limited

[2012] NZHC 500

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

CIV-2012-441-060 [2012] NZHC 500

IN THE MATTER OF     Section 250 of the Companies Act 1993

BETWEEN  OCEANIC PACIFIC SALVAGE AND STEEL LTD (IN LIQUIDATION) Applicant

ANDSPECIALISED CONTAINER SERVICES (NAPIER) LIMITED

Respondent

Judgment:      22 March 2012

JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

This judgment of Associate Judge Gendall was delivered on 22 March 2012 at 2.30 pm under r 11.5 of the High Court Rules.

Solicitors:           Andrei Sharko Ltd, PO Box 639, Napier 4140

Whitlock & Co, Solicitors, PO Box 91449, Victoria Street, Auckland 1142

OCEANIC PACIFIC SALVAGE AND STEEL LTD (IN LIQUIDATION) V SPECIALISED CONTAINER SERVICES (NAPIER) LIMITED HC NAP CIV-2012-441-060 [22 March 2012]

[1]      Before  the  Court  is  an  application  seeking  an  order  terminating  the liquidation of Oceanic Pacific Salvage and Steel  Ltd (In  Liquidation) (Oceanic) which was placed into liquidation by this Court on 15 March 2012.

[2]      The application is brought pursuant to s 250 Companies Act 1993 it appears by Oceanic as the notional applicant.

[3]      It is clear, however, that a company in liquidation itself is unable to bring an application to terminate a liquidation – see Brookers Insolvency Law & Practice CA250.02 and s 250(2) Companies Act 1993.

[4]      Notwithstanding this jurisdictional problem, however, it would seem that this application has in essence been brought (and as a matter of urgency) by Mr Joseph Hamblett Hodge (Mr Hodge), a director and shareholder of Oceanic.  Mr Hodge has sworn a supporting affidavit dated 16 March 2012.

[5]      Under all the circumstances here I am prepared to accept that the application before me is essentially one brought by the director Mr Hodge as the real applicant. In terms of s 250(2)(c) Companies Act 1993, jurisdiction exists for such an application and for this Court now to properly consider it.

[6]      That  said,  I  pass  on  to  consider  the  grounds  advanced  for  the  present application.  Essentially these are that Oceanic is not insolvent, it is able to pay its debts   including  the  debt   to   the  plaintiff  in   this   proceeding,   liquidation   is inappropriate and the status quo here should be preserved to ensure that the business in question which is continuing at present is said to be viable, and the liquidation should not continue with resulting prejudice to all concerned.

[7]      As to these aspects, Mr Hodge in his affidavit sworn 16 March 2012 has explained the circumstances in which Oceanic was placed into liquidation and noted that these involved a misunderstanding on his part that the liquidation application itself when called before this Court on 15 March 2012 would be “put on hold” pending further discussions.

[8]      He deposes also to the fact that Oceanic is trading and able to resolve its obligations to all its creditors without delay.

[9]      The plaintiff creditor has in turn filed a memorandum in this matter dated 20

March 2012 agreeing to an order terminating the liquidation.  It does so on the basis that the sum of $7,000.00 is paid into the plaintiff’s solicitor’s trust account forthwith and the liquidation application itself is simply adjourned to be called in the next List in April 2012.

[10]     In addition, the liquidators appointed for Oceanic in this matter have also provided a letter to the Court which states that, provided their costs and expenses associated  with  the  liquidation  are  paid  in  full  (these  amounting  at  present  to

$4,978.88 (GST exclusive)), they do not oppose the application terminating the liquidation.

[11]     The Court when exercising its discretion to consider an application such as the present one under s 250 Companies Act 1993 generally considers a range of factors as set out at para 250.03 of Brookers Companies & Securities Law.  These are:

CA250.03          Applicable Principles

In the ordinary run of cases, the Court will only exercise its discretion to order a termination of a liquidation if:

(a)        All the creditors have been paid in full or satisfactory provision has been made for them to be paid or they have consented; and

(b)        The liquidator’s costs have been paid or secured; and

(c)        The shareholders have given their consent or would be in no worse position than if the liquidation had proceeded to its conclusion.

[12]     In the present case, as I understand it, Oceanic is in a position to meet the liquidator’s costs and disbursements now, to settle the agreed amount of $7,000.00 with the plaintiff in this proceeding and to meet all its other outstanding debts.

[13]     As I have noted, the application before me is one effectively by Mr Hodge as both director and shareholder of Oceanic, and it seems clear therefore that the shareholders  would  be  in  no  worse  position  now  then  if  the  liquidation  had proceeded to its conclusion.

[14]     For all these reasons I accept that an order terminating the liquidation of

Oceanic should be made now but on certain conditions.

[15]     An order is now made terminating the liquidation of Oceanic.  This order is to  lie  in  Court  however  and  not  be  sealed  until  the  Registrar  has  received confirmation that:

(a)      The sum of $7,000.00 has been paid forthwith to the trust account of the solicitors acting for the plaintiff in the liquidation proceeding; and

(b)The liquidator’s costs and disbursements (estimated at present at approximately $5,000.00 GST exclusive) have been fully paid forthwith.

[16]     This  matter  is  now  also  to  be  the  subject  of  a  call  in  the  Companies

Liquidation List at Napier at 10.00 am on 3 May 2012.

‘Associate Judge D.I. Gendall’